Canadian HR Reporter

CANADIAN HR REPORTER October 16, 2017 16 FEATURES HR SOLUTIONS How to survive a minimum wage hike By Alannah Turner and Leah Fochuk O n Oct. 1, 2017, Alberta saw the second of three increases to the mini- mum wage, bringing it to $13.60 per hour on the way to $15. In 2016, the minimum wage in- creased $1 to $12.20 per hour. At that time, many businesses were predicting significant harm to their ability to stay in business because of the increase in payroll costs. And certainly some small businesses shut down when their profit margin became too small to justify being in business. Many businesses continue to indicate they are struggling in to- day's economy and are bracing for the second stage increase toward 2018's $15-per-hour minimum wage. Retail and restaurants are the two industries most affected. Both are dealing with the resulting issue of pay compression and the cost of maintaining equitable pay differ- entials among all employees and their supervisors and managers. So, how does a small business survive (and maybe even thrive) and continue to employ minimum wage workers, while trying to hold onto a reasonable profit margin? Here are some options: Downsizing: Some employ- ers have reduced the number of overall staff. Laying off employees is never easy, but it may be a viable option for survival of the business. Employers should assess the total number of employees and their duties to ensure an efficient level of staffing and the best employees are retained, and their productiv- ity is maximized. The consequences of this, however, may be that the work becomes more taxing on the re- maining staff as businesses try to do more with less. Employers may also have issues resulting from limited or no coverage for sick or injured employees. All of which may impact cus- tomer service, in addition to the health and wellness of employ- ees. It may also require additional hours on the part of business owners to be present at the work- place, which may mean they are spending less time focusing on growing the business. In some cases, employers are choosing to hire more mature workers looking for minimum wage positions over student ap- plicants. ey see older workers as more stable and committed for a longer term, thereby potentially reducing turnover and recruit- ment costs. But this may force students to hold more student debt or parental debt due to lack of part-time work. Reduced hours, benefits: An- other method is the retention of the same number of workers while reducing the overall working hours to keep the payroll cost about equal to last year's rate. is enables em- ployers to have more resources to cover for sick or absent employees, and doesn't require an increased presence by the owner. An employer may also adjust the hours the business is open, perhaps focusing on the busiest times of the day or week. Unfortu- nately, workers will feel the pinch of fewer hours and a correspond- ing reduction in their earnings because of less work. Ultimately, this could lead to in- creased turnover for the business as workers look for more consis- tent work hours. Some employers have also had to reduce or eliminate health ben- efits and other perks provided to employees, such as bonuses or staff appreciation parties. Increased pricing: Businesses are also passing on the burden of increased payroll to customers by increasing the prices for goods or services. ere is, however, a limit to the price a consumer will pay, and businesses risk pricing them- selves out of the market. Many businesses have been forced to find other ways to cut costs in order to maintain profit- ability — whether it is finding new vendors, asking for price reduc- tions or eliminating less profitable business offerings. People practices Many businesses have been im- plementing a combination of the above changes to help protect their profitability. It's even more important for businesses to con- sider the effectiveness of people practices by: • ensuring a focus on hiring and retaining the right employees • using thorough and structured recruitment practices • providing appropriate training to ensure employees are effective in their work • immediately addressing perfor- mance issues. It's also a good idea to shift thoughts around part-time, hourly paid staff from "We will hire as need be and see how they do" to "We will invest some time to ensure that even our part-time people are the best fit for the role and the company," and to recog- nize the importance of a success- ful business relative to their input and effort. It takes a team to make a business work, and a focused one to make it truly successful. Change is hard, and Alberta has really taken a lot of hits with the economy and potential upcom- ing tax changes to business. But we don't want a living wage at the expense of small business, nor the success of small business owners at the expense of minimum wage workers. We want business to thrive and continue to drive the economy. If payroll costs are a significant cost for your business, make sure to use strong HR practices to ensure you are spending money wisely. Alannah Turner and Leah Fochuk are both senior consultants at Salo- pek & Associates in Calgary. For more information, visit www.salopek consulting.com. CHANGE MANAGEMENT Three ways to make mergers work There's the textbook approach, the innovative way or the tyrannical method By Evert Akkerman I n the HR business, we often hear people say they love change. Taking human na- ture into consideration, this may be more a fashion state- ment than anything. It's part of our addiction to excitement, the hyper-society where everyone is busy, the adrenaline rush that comes from running around all day. In reality, people crave structure, stability and routine. is makes perfect sense from an efficiency standpoint; in his book e Pow- er of Habit, Charles Duhigg says an efficient brain requires less room. People tend to resist change. If change was easy, and people loved it, then why is the transfer of train- ing such a huge issue in human resources? Employers spend billions of dollars every year on confer- ences, seminars and courses to teach people new skills, and when they return to work, they go right back to the old ways, which offer the comfort of an old shoe. If we don't enforce the new way, noth- ing changes. Let's look at three real-life ex- amples of successful organiza- tional change. e textbook way Several years ago, Credit Union A and Credit Union B decided to merge. e transition really was a textbook example, as the HR manager at Credit Union A had taken his inspiration from books he studied while pursuing his HR designation. In the run-up to the merger, he connected with his counterpart at Credit Union B. ey mapped out the HR side of the transition, envisioning and addressing issues and concerns that might come up. ey started sending regular updates to both groups of employ- ees to ensure information flowed freely. Authorized by their CEOs, they assured everyone of their contin- ued employment. ey answered questions and harmonized the benefits plans, pension plans and vacation entitlements. e human resources functions were fully synchronized when the merger finally took effect, and they were physically in the same location a week before the official date. From an HR perspective, this merger went off without a hitch. e innovative way Many years ago, in Europe, a production company with 5,000 workers was losing money and headed for bankruptcy. e CEO, as a last resort, called one of his friends, a management consul- tant, and asked for help. e consultant listed three con- ditions under which he would take on the project: he would bring in his own team; rather than moving into head office, he wanted a trail- er set up just inside the main gate; and he wanted a flag pole erected in front of the trailer. e CEO, at his wits' end, agreed. A week later, the consultant moved his team of five into the trailer and raised a pirate flag to the top of the pole. e team started its audit, putting in long days, going through records, as- sessing revenues and expenses, and talking to people at all levels If change was easy, and people loved it, then why is the transfer of training such a huge HR issue? Credit: Suat Gursozlu (Shutterstock) PREPARE > pg. 17

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